Mubasher: Volkswagen agreed to inject around $2.6 billion in Ford’s autonomous-vehicle unit Argo AI in a deal valuing the startup at $7 billion, the Wall Street Journal (WSJ) reported, citing sources familiar with the matter.

Argo would work on autonomous-driving technology for Volkswagen, and ultimately would provide systems for commercial use, while extending its work with Ford, the sources told the WSJ.

The $2.6 billion investment, which is due to be announced on Friday, comprises $1 billion in capital funding and the $1.6 billion value of the German carmaker’s driverless-vehicle technology division.

The group, under the name of Autonomous Intelligent Driving, is managed by Volkswagen’s Audi and will lay the foundation of Argo’s operations in Europe, according to the sources.

This was the latest deal in the auto industry as companies have been stepping up efforts as they raced towards jumping on the bandwagon of self-driving and electric vehicles and weave their business models therearound.

General Motors’ (GM) Cruise subsidiary is developing an autonomous-driving system with Honda which would invest $2.75 billion in the GM unit.

German auto rivals Daimler and BMW partnered to develop driverless cars and smartphone mobility services.